On Tuesday, March 5th, DC Councilmembers will consider an amendment to an-already-passed-once bill – the Restaurant Revitalization and Dram Shop Clarification Amendment Act of 2024 – which would speed up the elimination of DC’s tipped minimum wage (from July 2027 to July 2025), while skipping this year’s increase of the tipped minimum wage. This proposal, supported by RAMW (the local DC restaurant association which claims a subset of restaurants as members), has been fiercely opposed by many of the advocates of I-82 in the first place. The amendment is being introduced by DC Council Chairman Phil Mendelson, and co-introduced by Anita Bonds and Brooke Pinto. Amanda Michelle Gomez of WAMU reported this news earlier today.

Under current law, the base tipped minimum wage on July 1, 2024 will go up from $8 to $10 an hour, with the full minimum wage going up from $17 to $17.50. July 2025 would see tipped workers get a direct min wage up to $12, then $14 in July 2026, with the tipped minimum wage being completely eliminated in July 2027 (probably roughly $19/hour).

However, if the amendment is passed, then the tipped minimum wage would go up slightly (due to pre I-82 law still on books) to roughly $8.25/hour in July (instead of $10/hour), with the tipped minimum wage being eliminated a year later in July 2025 so all workers have to paid a full minimum wage directly by employer (this will likely around $18, depending on inflation in 2024).

Chairman Mendelson explained why he’s proposing this:

The drawn-out of implementation of Initiative 82 — the elimination of the tip credit — has created difficulty and uncertainty among restaurant operators and confusion among diners as wage models with the declining tip credit must be rethought every year until July 1, 2027, when the elimination of the tip credit is fully phased in. Deferring the 2024 increase in the tipped minimum and moving up the date for full elimination of the tip credit will not only decrease the period of certainty, but benefits currently tipped workers as they will receive over $12,000 in additional base wages over the next three years.

To be clear, I have no intent to restore the tipped minimum wage in the future and would oppose any such mischief. That fight is over. But the industry wants the end-date to happen sooner.

“Industry” appears to mean “RAMW” in this quote.

Two More Amendments

The Chairman also proposes two other amendments: 1) eliminate tip reporting portal required by the 2018 Tipped Workers Fairness Amendment Act, which has not been created by DOES (this was part of the I-77 repeal law), 2) capping service charges at 20% and making the DC Office of Attorney General guidance regarding service fees and other surcharges the law essentially.

The latter is controversial. Specifically the amendment would: 1) explicitly allow businesses to charge a max 20% “service fee” but only if 1) the type/amount of fee is prominently disclosed verbally prior to placement of order, on menu and website (if there is one), and on signage “reasonable visible upon entry.” 2) disclosure says purpose of fee including “explaining withe specificity how the fee will be used or distributed including … the proportion of the fee distributed to employees.” Restaurants would be required to use the service fees as they disclosed. The amendment would also hold that if a restaurant imposes a service fee consistent with this, it would not be an “unfair or deceptive trade practice” under the DC Consumer Protection Procedures Act, which would make it more difficult for lawsuits to prevail. According to the Chairman, this was included to create a “safe harbor” for restaurants in compliance with the OAG guidance to be protected from lawsuits.

Councilmember Matt Frumin also is proposing an amendment that would exclude certain portions of service charges from sales tax calculations (though this is subject to finding money in the budget for this). It’s a bit complicated: so see below

The rest of the bill isn’t that controversial after going through changes – would clarify liquor license/dram shop liability for one. Tomorrow’s vote, if approved, would send the bill to the Mayor’s desk for signature followed by Congressional review period.